§ 8.25 p.m.
§ House again in Committee.
§ Clause 98 [Regulated terms: distributions and share rights]:
§ Lord Brabazon of Tara moved Amendment No. 209:
Page 150, line 37, leave out from ("society's") to end if line 38 and insert ("reserves bear to its total liability to its numbers in respect of shares.").
§ The noble Lord said: This is an amendment to specify more precisely the rights of members eligible to vote on a proposal to convert to plc status. I beg to move.
§ Lord Brabazon of Tara moved Amendment No. 210:
Page 151, line 7, leave out ("1985") and insert ("1986 or Article 570 of the Companies (Northern Ireland) Order 1986")
§ The noble Lord said: This amendment was spoken to with Amendment No. 63. I beg to move.
§ Lord Brabazon of Tara moved Amendment No. 211:
Page 151, line 18, at end insert—
Where, in connection with any transfer, rights are to be conferred on members of the society to acquire shares in priority to other subscribers, the right shall be restricted to those of its members who held shares in the society throughout the period of two years which expired with the qualifying day; and it is unlawful for any right in relation to shares to be conferred in contravention of this subsection.
(7B) Where the successor is an existing company, am distribution of funds to members of the society, except for the distribution required by subsection (2)(b) above, shall only be made to those members who held shares in the society throughout the period of two years which expired with the qualifying day; and it is unlawful for any distribution to be made in contravention of the provisions of this subsection.").
§ The noble Lord said: In moving Amendment No. 211 I shall speak also to Amendments Nos. 212 to 215. These amendments are to add one additional limitation on cash distributions in a conversion to what is already included in the Bill and to make consequential changes. The additional limitation applies in the case of transfers to existing companies. In such cases cash distributions, except those required under subsection (2)(b), must be limited to members who have held shares throughout the two-year period ending in the qualifying day. I beg to move.539
§ Lord Williams of Elvel
I am grateful to the noble Lord for explaining what these amendments are about. However, I cannot quite see the purpose. Can he explain to us why these amendments need to be put down and what is the reason for them?
§ Lord Brabazon of Tara
I can go a little further than I did in moving the amendment. The Government are concerned that adequate safeguards should exist to secure that conversions happen for reasons for commercial development and are not decided by the prospect of possible short-term financial gains. As the Government have also made clear ever since they published their consultative document on building society conversion in December last year, it is important that the conversion provisions work to prevent speculative flows between societies on rumours of an impending conversion. I gather that is what happened in America in certain situations, and that is what we seek to avoid happening in this sort of situation.
Clause 98 already contains a number of limitations on cash distributions and other benefits to members on conversions. However, at present it provides insufficient safeguards in one area. It puts no limit on who may be paid a cash distribution in the event of a transfer of business to an already existing society. It is clearly important that it should. Otherwise, for example, a society could tempt investors into it in order to vote in favour of a conversion with the promise of an immediate cash bonus; or just such speculative flows as I just mentioned might be started if it seemed a society might transfer to an existing company. This matter is pretty well covered elsewhere in the Bill. This is just an oversight on this aspect of it. These amendments correct the oversight.
§ Lord Lloyd of Kilgerran
Like the noble Lord, Lord Williams of Elvel, I was surprised to find that this amendment was necessary. I have tried to understand what the Minister has said on this matter. Is he really saying that the ordinary law does not cover this situation in protecting investors and that the amendment is necessary, or is it merely an oversight in the Bill? Is it the inadequacy of the present law that has triggered off the necessity to have this amendment? I still do not understand the Minister's explanation, but that is entirely my fault, I am sure.
§ Lord Brabazon of Tara
This is part of a larger aspect of how building societies might become plcs. There are certain safeguards attached to the conversion in so far as, if the building society wishes to offer its members incentives to convert to a plc, in order to avoid a flow of funds out of one building society into another because a rumour might have started that a building society was about to turn itself into a plc and offer its members cash bonuses, members must have been members for two years, before they can benefit from this. This is covered elsewhere in the Bill; but this is an oversight in one particular aspect of it.
§ Lord Williams of Elvel
It does help to clarify the position, I think. However, it raises all sorts of other questions. We have had our debate on the whole question of whether building societies should be allowed to convert to plcs. If the noble Lord is now saying that there are a number of oversights in the Bill as originally drafted which would tend to encourage a speculative flow of funds if there is (to use his words) a rumour that a building society might convert into a plc, presumably there will be a much greater speculative flow when a building society decides that it is going to turn itself into a plc. As we all know, the waiting period of two years before you can get your cash distribution is a relatively short time. I wonder whether this oversight in the Bill is now corrected. I wonder—not that I am encouraging further government amendments—whether there should not be further government study on exactly how this transition is going to take place. I think that this is an extremely difficult problem.
§ Lord Brabazon of Tara
As far as I know from the Bill, this completes the whole series. There was a technical oversight on this particular aspect, and this should close all the gaps.
§ Lord Brabazon of Tara moved Amendments Nos. 212 to 215:
Page 151, line 26, leave out from beginning to ("where") in line 33 and insert (", and (b)")
Page 151, line 39, leave out from ("made") to second ("in") in line 40.
Page 152, line 2, after ("(2)") insert (", (7A), (7B),").
Page 152, line 4, leave out ("and (8)") and insert (", (7A), and (7B)").
§ Clause 98, as amended, agreed to.
§ Clause 99 [Protective provisions for specially formed successors]:
§ Lord Brabazon of Tara moved Amendment No. 216:
Page 153, line 10, leave out ("Act (Northern Ireland) 1960") and insert ("(Northern Ireland) Order 1986").
§ The noble Lord said: This amendment was spoken to with Amendment No. 63. I beg to move.
§ Clause 99, as amended, agreed to.
§ Clause 100 [Transfer regulations]:
§ Lord Brabazon of Tara moved Amendment No. 217:
Page 153, line 18, after ("1985") insert ("or, as regards Northern Ireland, the Companies (Northern Ireland) Order 1986").
§ The noble Lord said: This amendment was also spoken to with Amendment No. 63. I beg to move.541
§ Clause 100, as amended, agreed to.
§ Clause 101 [Cancellation of registration]:
§ Lord Skelmersdale moved Amendment No. 218:
Page 153, line 38, leave out ("company insolvency laws") and insert ("applicable winding up legislation").
§ The noble Lord said: My Lords, I spoke to this with Amendment No. 72. I beg to move.
§ Clause 101, as amended, agreed to.
§ Clauses 102 to 104 agreed to.
§ Clause 105 [Restriction of use of certain names and descriptions]:
§ Lord Skelmersdale moved Amendment No. 219:
Page 159, line 29, leave out ("Act (Northern Ireland) 1960") and insert ("(Northern Ireland) Order 1986").
§ The noble Lord said: My noble friend spoke to Amendments Nos. 219 and 220 with Amendment No. 63. I beg to move.
§ Lord Skelmersdale moved Amendment No. 220:
Page 159, line 36, leave out from ("Article") to end of line 37 and insert ("4 of the Business Names (Northern Ireland) Order 1986").
§ Clause 105, as amended, agreed to.
§ Clauses 106 and 107 agreed to.
§ Clause 108 [Officers and auditors not to be exempted from liability]:
§ Lord Skelmersdale moved Amendment No. 221:
Page 161, line 33, leave out from ("be") to ("(which") in line 34 and insert ("Article 675 of the Companies (Northern Ireland) Order 1986").
§ The noble Lord said: This was also spoken to with Amendment No. 63. I beg to move.
§ Clause 108, as amended, agreed to.
§ Clauses 109 to 116 agreed to.
§ Clause 117 [Interpretation]:
§ Lord Skelmersdale moved Amendment No. 222:
Page 166, line 24, at end insert—
(" "the applicable winding up legislation" and "the companies winding up legislation" have the meanings given by section 90;"),
§ The noble Lord said: I spoke to this with Amendment No. 72. I beg to move.
§ Lord Skelmersdale moved Amendments Nos. 223 and 224:
Page 166, line 25, after (" "associated" ") insert ("and "linked by resolution" "),
Page 166, line 27, leave out ("18(17)") and insert ("18(9) and (17) respectively;").
§ The noble Lord said: My noble friend spoke to Amendments Nos. 223 and 224 with Amendment No. 166. I beg to move.
§ Lord Skelmersdale moved Amendment No. 225:
Page 166, line 30, after ("44") insert ("or authorisation by virtue of section 91(6) or paragraph 6(1) of Schedule 20 to this Act").
§ The noble Lord said: I spoke to this amendment with Amendment No. 203. I beg to move.
§ Lord Skelmersdale moved Amendments Nos. 226 and 227:
Page 167, leave out lines 1 and 2.
Page 167, line 15 leave out ("company insolvency laws") and insert ("applicable winding up legislation").
§ The noble Lord said: I beg to move Amendments Nos. 226 and 227. They were spoken to with Amendment No. 72.
§ Lord Skelmersdale moved Amendment No. 228:
Page 168, line 33, leave out ("the central office" and insert (", in the case of functions of the central office, to the Chief Registrar;").
§ The noble Lord said: The purpose of this amendment, which is technical, is to achieve consistency with subsection (2) of Clause 114. Fees in respect of central office functions are to be paid to the chief registrar as provided for in Clause 114(2) and not to the central office. I beg to move.
§ Lord Williams of Elvel
I do not wish to quarrel with the substance of the amendment but I find it rather extraordinary that we have got to the Committee stage in your Lordships' House, having gone through the whole procedure in another place, and we have an inconsistency in this Bill which has to be rectified by a technical amendment at this stage. I will not oppose the amendment.
§ Lord Skelmersdale
I should have thought that clarification was valuable whenever it should occur. I should have thought the noble Lord would be delighted with it.
§ Lord Williams of Elvel
I am always delighted with the noble Lord's clarifications. I only wish that they had come a little earlier in the stages of the Bill.
§ Lord Skelmersdale moved Amendment No 229:
Page 169, line 16, at end insert—
("() For the purposes of any provision of this Act referring to the value of a person's shareholding in a building society—
§ The noble Lord said: I beg to move Amendment No. 229, which the noble Lord will not be pleased to 543 hear is a technical amendment to provide a definition of the value of a person's shareholding where it appears in the Bill. This happens at a number of places and the Bill refers to the value of investors' shareholdings—for example, on a member's entitlement to vote on resolutions. It is obviously important that the Bill should be clear on what precisely this means. The Building Societies' Association has attached particular importance to this point. This amendment does it.
§ Lord Williams of Elvel
I understand that this is in the notes with which we have been provided and is regarded as a technical amendment. Indeed, the noble Lord repeated that it was a technical amendment. I am not sure that it is entirely as technical as the noble Lord and, indeed, the notes make out. Here we are talking about the value to be placed on an investor's shareholding—for example, on a member's entitlement to vote on resolutions. The Building Societies' Association, I understand, reading from the notes with which the noble Lord kindly provided me, is broadly content with this definition, but the fact that it is broadly content may give rise to some controversy. If it is a question of the Building Societies' Association being broadly content, this is clearly not a technical amendment but an amendment of some substance. Am I right or wrong?
§ Lord Skelmersdale
I think the noble Lord actually is wrong. The Building Societies' Association gives advice to the noble Lord, to others of your Lordships and—
§ Lord Skelmersdale
Then I apologise to the noble Lord. Certainly it gives advice to others in the Committee and from time to time it lets me in on its thinking. The Building Societies' Association has had an opportunity to comment on this amendment and understands that the Government have aimed at providing a practical definition and one which should allow the value of a member's shareholding to be readily calculable by and available to his or her society. This is only the Committee stage, but if the association has any further worries I have absolutely no doubt at all that they will be communicated to the Committee and then to myself, in which case I hope to be able to satisfy the association when that occasion arises.
§ Clause 117, as amended, agreed to.
§ Clause 118 [Amendments, repeals, revocations and transitional and saving provisions]:
§ Lord Skelmersdale moved Amendment No. 230:
Page 169, line 27, after ("Schedule 20") insert ("and of any order under section (Power to make transitional and saving provisions)").
§ The noble Lord said: This is a drafting amendment. I beg to move.
§ Lord Williams of Elvel
I understood that the noble Lord might be speaking also to Amendments Nos. 544 231, 265 and 266. If he is not doing so, perhaps he will be kind enough to tell us.
§ Lord Skelmersdale
I am grateful to the noble Lord, Lord Williams of Elvel, for that short breathing space. The noble Lord is absolutely right. The first amendment adds a new clause after Clause 118— Power to make transitional and saving provisions—as well as Clause 122—Short title—and Clause 123 itself to the conveyancing provisions excluded from the Treasury commencement order power under Clause 123(3), since the three clauses added by the amendment will come into effect on Royal Assent. The reason for the continuing exclusion of Section 121 and Schedule 21(3) is that they will be brought in by a commencement order from my noble and learned friend the Lord Chancellor under subsection (4), and not from the Treasury.
The second amendment is technical and ensures that the Treasury will have power to bring into effect power to make a statutory instrument under a particular clause before the commencement of the rest of that clause.
§ Lord Williams of Elvel
I wonder whether the noble Lord would like to reconsider what he has said in the light of what I have put down in Amendments Nos. 230, 231, 265 and 266. It seems to me that these refer to Treasury powers to make transitional and saving provisions under the Act. Is that what the noble Lord was speaking to? I did not quite understand.
§ Lord Skelmersdale
I was speaking to the block, as the noble Lord originally invited me to do. I have now explained to the best of my ability exactly what they seek to do, and why. If the noble Lord has any further questions, of course I shall be delighted to try and answer them.
§ Lord Williams of Elvel
I am very glad that the noble Lord, Lord Skelmersdale, has had his thoughts so concentrated on these points. It seems to me that in Amendment No. 231, if I may speak to it, there are some very substantial powers being given to the Treasury on the provisional arrangements. Although at this late stage I do not want to oppose these amendments, I think we must recognise that these are not inconsiderable powers, and I think the Committee should be aware of that.
§ Lord Skelmersdale
They are temporary powers. As the side note to the new clause makes clear, it is power to make transitional and saving provisions, and the effect of the new clause is to enable the Treasury to make orders by statutory instrument to provide for an orderly transition from the present to the new building society legislation, as I sought to explain earlier. I cannot think of anything in a government provision that could possibly be more reasonable than that.
I must support the noble Lord, Lord Williams of Elvel. In his opening remarks, my noble, friend Lord Skelmersdale made clear that he felt that these.are drafting amendments. It is quite clear that Amendment No. 231 is far from being a drafting amendment.
§ Lord Skelmersdale
I was wrong, and I apologise. I have now corrected the error, I believe. I beg to move.
§ Clause 118, as amended, agreed to.
§ Lord Skelmersdale moved Amendment No. 231:
After Clause 118, insert the following new clause:
§ ("Power to make transitional and saving provisions.
§ The noble Lord said: I spoke to this amendment at rather more length than I intended with Amendment No. 230. I beg to move.
§ Schedule 18 [Amendments of enactments]:
§ 8.45 p.m.
§ Lord Skelmersdale moved Amendment No. 232:
Page 252, line 39, at end insert—
('"( ) For section 450 (modifications of building society law) there shall be substituted the following section—
§ "Modifications of building society law.
450. So much of an advance by a building society which is partly financed under section 445 (assistance for first-time buyers) or the corresponding Scottish or Northern Ireland provisions as is so financed shall be treated as not forming part of the advance for the purpose of determining—
§ The noble Lord said: I beg to move Amendment No. 232, and I shall speak also to Amendments Nos. 233, 236, 238, 239 and 241,
§ The purpose of these amendments is to add a reference to the Housing Association Act 1985 in the schedules listing amendments and repeals to other Acts. These amendments achieve a number of drafting amendments and repeals to the Housing Association Act needed as a result of the provisions of this Bill. Amendment No. 232 makes a necessary change to Section 450 of the Housing Association Act to align 546 that legislation with the new asset classification in this Bill.
§ Amendment No. 238 repeals the definition of "designated building society" in Section 459. The Bill renders that term obsolete. Schedule 19 already repeals a reference to it in Section 458 of the Housing Act, and this amendment completes the job. ! beg to move.
§ Lord Skelmersdale moved Amendment No. 233:
Page 252. line 43, at end insert—
§ The noble Lord said: I have just spoken to this amendment. I beg to move.
§ Lord Skelmersdale moved Amendments Nos. 234 and 235:
Page 253, line 3, leave out from beginning to end at line 8.
Page 253, line 37, leave out from beginning to end of line 42.
§ The noble Lord said: Amendments Nos. 234 and 235 were spoken to with Amendment No. 63. I beg to move.
§ Lord Skelmersdale moved Amendment No 236:
Page 254, line 15, at end insert—
("( ) For Article 155 (building society law) there shall be substituted the following Article:
§ Modifications of building society law.
155. So much of an advance by a building society vm'eh is partly financed under this Part or sections 445 to 449 of the Housing Act 1985 or the Home Purchase Assistance and Housing Corporation Guarantee Act 1978 as is so finance shall be treated as not forming part of the advance for the purpose of determining—
() In Article 155A (exclusion of Restrictive Trade Practices Act 1976) after "Scottish Provisions" there shall be inserted "(namely, sections 445 to 447 of the Housing Act 1985 or the Home Purchase Assistance and Housing Corporation Guarantee Act 1978)").
§ The noble Lord said: The purpose of this amendment is to add two further amendments and repeals in Northern Ireland legislation to Schedules 18 and 19. They are comparable with the earlier amendments we moved to put Northern Ireland into the Bill. I beg to move.547
§ Lord Skelmersdale moved Amendment No. 237:
Page 254, line 34, at end insert—
§ ("Companies (Northern Ireland) Order 1986.
§ The noble Lord said: This amendment was spoken to with Amendment No. 63. I beg to move.
§ Schedule 18, as amended, agreed to.
§ Schedule 19 [Repeals and revocations]:
§ Lord Skelmersdale moved Amendments Nos. 238 and 239:
Page 256, line 9, column 3, at end insert—
|("In section 459, the entry relating to "designated building society".").|
Page 256, line 9 at end insert—
|("1985 c.69.||The Housing Associations Act 1985.||Sections 63 to 66. In section 72, the definitions of "building society" "Chief Registrar" and "officer".|
|In section 73, the entries relating to "building society", "Chief Registrar" and "officer".").|
§ The noble Lord said: With your Lordships' permission, I should like to move Amendments Nos. 238 and 239 together. They were spoken to with Amendment No. 232. I beg to move.
§ Lord Skelmersdale moved Amendments Nos. 240 to 242:
Page 257, leave out lines 10 to 13.
Page 257, line 36, column 3, leave out ("paragraph 13") and insert ("paragraphs, 13, 51(2) and 51(5)(a)").
Page 257, line 38, at end insert—
|("S.I. 1986/000 (N.I.00)||The Companies Consolidation (Consequential Provisions) (Northern Ireland) Order 1986.||In Part I of Schedule I the entry relating to the Building Societies Act (Northern Ireland) 1967.").|
§ The noble Lord said: I hope it will be for the convenience of the Committee if I move these three amendments en bloc. They were spoken to with Amendments Nos. 63 and 232. I beg to move.
§ Schedule 19, as amended, agreed to.
§ Schedule 20 [Transitional and saving provisions]:
§ Lord Brabazon of Tara moved Amendment No. 243:
Page 264, line 34, at end insert—
§ ("Permissible securities for advances.
§ The noble Lord said: This amendment was spoken to with Amendment No. 44. I beg to move.
I am again concerned about the star at the beginning of this amendment. Could my noble friend be kind enough to tell me what the alteration is to this amendment?
§ Lord Brabazon of Tara
Certainly. I think a gremlin crept into the printing of the first Marshalled List. If the noble Lord will turn his attention to subsection (3), he will find that the last word of the first line was originally printed as "the", when it should have been "this".
§ Lord Skelmersdale moved Amendment No. 244:
Page 266, line 6, at end insert—
§ ("Qualifying assets.
. For the purposes of the application of section 116 by reference to the annual accounts of a building society prepared before the first financial year for which accounts under Part VIII of this Act are prepared, the reference to the total commercial assets of a society shall have effect as a reference to the amount in the last balance sheet prepared under the Building Societies Act 1962 which represents the total assets constituted by mortgage debts outstanding to the society.").
§ The noble Lord said: This is another transitional provision to provide for outstanding loans under the 1962 Act to count as commercial assets for the purposes of the qualifying asset holding. Total commercial assets, denned in Clause 117 as the sum of Classes 1, 2 and 3 assets, will not formally be calculated until the first accounts prepared under the new accounting arrangements. There is an obvious need for a transitional provision to allow for the old system to be used when the annual accounts for the building society were prepared before the first financial year under which accounts under Part VII of this Bill came into being. This amendment achieves that, and I beg to move.
§ Lord Williams of Elvel
I should like to study in Hansard what the noble Lord has just said, and perhaps, if we need to revert to it, we will come back at Report stage.
§ Lord Skelmersdale moved Amendment No. 245:
Page 267. line 5, leave out ("sub-paragraph (7) below") and insert ("those sub-paragraphs").
§ The noble Lord said: This is a consequential and drafting amendment referring to the last amendment. I beg to move.
§ Schedule 20, as amended, agreed to.
§ Clause 119 [Northern Ireland]:
§ Lord Skelmersdale moved Amendment No. 246:
Page 169, line 37. after ("section") insert ("15, section").
§ The noble Lord said: This amendment was spoken to with Amendment No. 154. I beg to move.
§ Clause 119, as amended, agreed to.
§ Clause 120 agreed to.
§ Clause 121 [Recognition of building societies, other institutions and individuals as suitable to provide conveyancing services]:
§ On Question, Whether Clause 121 shall stand part of the Bill?
In the course of the Administration of Justice Bill on 14th March my noble and learned friend the Lord Chancellor said with his customary robustness the following words:At any rate, what 1 promised your Lordships at the end of January was that 1 would not use this Bill as a subterfuge for inserting the Government policy in relation to in-house solicitors by a backdoor route; that this Bill was not the instrument by which it would be done, and, if it were done, it would be done openly and above-board by a piece of primary legislation." [Official Report; 14/3/86, col. 301].As I see it, this is precisely what this clause in this Bill is attempting to do. However, looking at the clause itself, you will see there fairly clumsy tautology, in that the clause states:this Act shall have effect with respect to the provision by building societies, other institutions and individuals in England".In fact the definition of "other institutions" by virtue of Schedule 21 includes building societies. In other words, as I see it, in an attempt to try to bring this provision within the scope of this Bill, that term has been used again.
This of course is de minimis. But the important point about this clause is that it releases, so to speak, Schedule 21, which contains the rules and regulations for building societies as regards providing conveyancing services. I have a major concern with regard to this. That concern is very much backed up by what my noble and learned friend the Lord Chancellor said, again during the course of the Administration of Justice Bill (now, of course, an Act). That Bill, your Lordships will recall, set up the scheme for licensed conveyancing. I should like to quote from col. 815 of 31st January, 1985. These words are extremely important and I am sure that my noble and learned friend has not moved away from these thoughts. He said:I am very much concerned, and I am glad to say that my colleagues are also concerned, to see that the danger of conflict of interest is avoided.".550 Your Lordships will recall that in Schedule 21 there is an attempt to handle this but, in my view, it is wishful thinking. It cannot possibly work. The reason is quite clear from experience. I think it is fair that we should learn and profit from the conveyancing experience of the United States of America.
The two countries share many fundamental problems in dealing with the question of how houses should be bought and sold and how purchasers can receive proper protection at an acceptable cost. Of course, this is precisely what this Part of the Bill is concerned with. In England we have a conventionally used system which is far from perfect but which has been extraordinarily successful in providing adequate protection at reasonable cost, which certainly nowadays is a great deal less than in the United States.
Some years ago the United States turned over most of the conveyancing to the mortgage lenders—in other words, to the savings and loans institutions, which, as your Lordships will know, are the equivalent of our building societies. In my view—and I am not alone in taking this view—the result has been a disaster for everyone except the lenders. In any discussion of conveyancing practice the transcendent issues are adequate protection for the house buyer, the need for proper representation and the inherent conflict of interests where the mortgagee dominates the transaction. We have heard in previous discussions on this Bill that the Government themselves are quite clear about the dominant position in the marketplace of the lenders. I do not think they can get away from that.
In England, each of the parties involved—that is to say, the buyer, the seller and the mortgagee—has been advised and assisted by his own qualified solicitor, and now licensed conveyancer, who ensures that no one can take advantage of the other. Yet the proponents of this new legislation insist that law and custom have thereby created a monopoly in the solicitors' profession, with the result that it is unfair, costly and so complicated that the public would be better served by permitting a single representative for the mortgagee to carry out the entire transaction.
I suggest that such a premise raises four questions of the most paramount importance. The first is: does the present reformed form of practice constitute a monopoly? Secondly, if banks and building societies are given the power to engage in conveyancing, will they create a new and dangerous monopoly? Thirdly, if such a monopoly is created, will the housebuyer receive the services and protection he needs? Fourthly, will conveyancing services provided by banks and building societies be cheaper than those provided by solicitors and licensed conveyancers?
A house buyer is free to select any one of these he chooses, and each solicitor or licensed conveyancer is in direct competition with every other. Because several parties must come together on common ground, it is necessary for the practice to have a great degree of outward uniformity—but this no more involves a monopoly than does a clearing house arrangement among banks.
It is certainly true that some years ago solicitors adopted the monopolistic practice of setting uniform scale fees. Without defending this practice—and I do 551 not approve of it—this was long ago swept aside, leaving solicitors free to set their own costs and to establish a market based on supply and demand. We have seen this practice working very well indeed, and, in real terms, the cost of conveyancing between solicitors has come down considerably. In my view, the term "solicitors' monopoly" has no meaning whatsoever.
What does exist is a conventional licensing system designed to protect the public. The rules say simply that unqualified persons shall not be permitted to hold themselves out to others as having a particular expertise. The same applies in the case of chartered accountants, chartered surveyors, doctors and others in hundreds of occupations requiring special skill.
Turning to the second question of whether lending institutions should be given a chance and should be expected to establish a new monopoly, logic and the entire experience in the United States of America clearly show that such an outcome is almost inevitable. The Government contend that abuse by the dominant person, the lender, will not occur, because buyers can shop around for the best possible terms and can thereby create a market. The real fact is very simply that the vast majority of housebuyers lack an understanding of bargaining powers to deal on equal terms with the large institutional lender, and I think that the Committee's experience of life generally will lead it to accept that point.
As to the third question of whether lending institutions can be expected to provide mortgagees with the needed protection and services, I believe that the answer is a resounding, "No". Because of timing and lack of incentive, lenders simply cannot properly represent the borrower. This is inevitable, because the lender has no interest in the terms of the contract of sale. All it is concerned with is that the buyer ultimately gets good title, not the terms by which the title was acquired, nor many other matters of great concern to the buyer but of none to the lender. This is a difficulty which cannot be avoided if the lender acts as the conveyancer.
Without reference to the time elements, the interests of the buyer and the lender are not the same. In some cases, these interests have deceptive similarity. In others, the mortgagee has no concern with matters that are of vital importance to the mortgagor; and in still others the interests are in direct conflict.
As to the interests which are similar but not identical, the best illustration is that as to title requirements. The buyer wants undisturbed possession of the property, and the right to use it as he pleases. The lender, on the other hand, wants only enough title to ensure repayment of the loan. It is not concerned with defects in title, which do not decrease the value of the house and which do not exceed the amount of the buyer's equity. Illustrations would be certain kinds of restrictive covenants and liens. The lender can ignore such defects, either because the title is still sufficient for its purposes or because it can afford as a large institution to take a businessman's risk. By contrast, the buyer must pay the cost of such title defects and has no redress against the lender.
552 It is not true, as is commonly believed, that title good enough for the building society is good enough for the buyer. This point I raised at an earlier stage of the Bill with the noble Lord, Lord Barnett, when he sugggested that many solicitors acted on behalf of the purchaser and the mortgage company, because I said that the mortgage company were agreeing to use the purchaser's solicitior. It was not a question of the purchaser agreeing to use the mortagor's solicitor, which is a very different situation. Where the lender does the conveyancing, the protection afforded to the borrower is necessarily residual and incomplete. It is argued that cases of direct conflict of interests are rare and inconsequential. Any such assertion is proof of the merit of the existing system of representation by the parties' own solicitors or licensed conveyancers.
Stated baldly, the lender wants to make as much out of the borrower as possible and. at the same time, to assume as little responsibility as possible. This can be curbed only if the buyer has his own solicitor or licensed conveyancer; or, to put put it in another way, if you make the lender the conveyancer, you put the fox in charge of the hen house. I am very concerned about this.
As to costs, experience in the United States of Amercia presently is very serious indeed. To put this baldly as well, instead of the lawyers ripping off their customers, it is now the savings and lending institu-tions doing it, which is to a considerable degree worse than past experience. I am not in any way suggesting bad faith, but there is this danger and we can learn a great deal from experience in the United States of America.
§ Lord Hacking
I put my name down in support of the Motion of the noble Lord, Lord Morris, that this clause should not stand part of the Bill, out of no sense of wishing to wreck the provisions which are proposed in this Bill. I should disclose that, unlike the noble Lord, Lord Morris, I am a solicitor of the Supreme Court, and I acknowledge that a number of members of my profession are very concerned about the effect on the conveyancing services they provide which is proposed to be implemented within the terms of this Bill.
However, I do not rise to my feet to support the noble Lord, Lord Morris, on the narrow position of wishing to reject altogether the proposed provisions of Clause 121 in this Bill. Nor do I do so out of any sense, as I repeat, of wishing to wreck the contents of the Bill. Clause 121 is quite separate from the rest of the provisions of this large Bill. It is curious; indeed, it is more than curious, it is revealing to look at the preamble to the Bill. This states this is:An Act to make fresh provision with respect to building societies".Then the second part of the preamble states,and [to make] further provision with respect to conveyancing services".Noble Lords have then to travel all the way through 170 pages of this long and detailed Bill until they come to Clause 121. That is the first clause, which is only two from the end of the Bill and on the same page as the end of the Bill (before one gets to the schedules) which gives effect to the second half of the preamble to the Bill.
553 The truth is that for good reasons or bad—and I do not challenge the good faith of the Government any more than did the noble Lord, Lord Morris—there has been tacked on to this Bill a clause which is quite separate from the rest of the Bill and which seeks to deal with conveyancing services—conveyancing services no longer to be within the monopoly of members of my own profession.
The Committee should come to this position, should it not? Having considered the proposal of the Government to remove the monopoly of solicitors, the Committee should consider whether the provisions as set out in Schedule 21 to the Bill are ones which thereafter will properly protect the consumer. Whatever else may be said against my noble profession —and there are critics of my noble profession—it is a profession that has been well-regimented for a number of years; it is also a profession that has a strict code of conduct; and is a profession that deals most severely with any members who fail to follow strictly its rules of conduct. Therefore, the conveyancing services, administered by members of my profession, are at least administered by a profession that is subject to wide and strict discipline.
Therefore when the Government seek to remove the monopoly from my profession and seek thereby to open the right to enter into the business of conveyancing to a number of other bodies, it is not surprising in Schedule 21 that safeguards are set out— safeguards that stand to be within the aegis of the noble and learned Lord, and rules which he may make consequentially under Schedule 21. A number of matters have, therefore, to be raised as to whether there are in Schedule 21 proper protections for the consumer and safeguards to ensure that employed solicitors and conveyancers are not subject to improper commercial pressures by their employers, and whether there are sufficient protections against conflict of interest. The noble Lord, Lord Morris, dealt with that in some detail. If one refers to paragraph 2 of Schedule 2 and the recognition rules that are here set out, one finds that there are no effective measures proposed by the Government to deal with this very fundamental problem of the conflict of interest. It is a fundamental problem because when there is a conflict of interest, members of the public, the consumers, are in peril.
There are other matters—and one has only to look at the number of detailed amendments that have been proposed by the noble Lord, Lord Foot—that require detailed consideration: to safeguard clients' money; to provide protection against secret commissions which should be disclosed; and to ensure in all its ramifications, and in this proposed extension of conveyancing services, that members of the public are properly protected.
The situation is this, is it not? At a late hour in the evening during a time when this Chamber is having to deal with an immense number of Bills and having to sit very long hours and consider a number of important aspects, noble Lords are now being invited, as the noble Lord, Lord Foot, is compelled to invite us, to consider a number of important matters which directly concern the interests of the public. In those circumstances what I am suggesting to the Government—and this is the reason I am supporting 554 the noble Lord, Lord Morris—is that the proper thing to do is not to try to tack on Clause 212 to this Bill—
§ Lord Hacking
I thank the noble and learned Lord very much indeed. I hope Hansard will record the clause accurately. The proper thing to do is not to attempt to tack on Clause 121 to this Bill, but so lay it aside to when noble Lords have proper time to consider it in the months of October and November—in November because the State Opening of Parliament normally does not take place until the beginning of November. Noble Lords will then have plenty of time to give proper consideration to such measures in, as I suggest, the months of November, December and January, before the deluge from the other place has again reached this Chamber. There may be a critical time factor in respect of this Bill, but there is no critical time factor in respect of Clause 121. For that sensible reason 1 invite the Committee not to take Clause 121 now but to leave it aside for mother time. Let us give it proper consideration in the next Session of Parliament. That is the reason why I support the noble Lord, Lord Morris.
§ Lord Lloyd of Kilgerran
Before the noble Lord sits down perhaps I may ask him a simple question, I am aware that the noble Lord has considerable experience of American practice in these matters. The noble Lord, Lord Morris, in his speech, made great play with the situation in America which he used to enforce his arguments. Does the noble Lord. Lord Slacking, support those arguments of the noble Lord, Lord Morris? He made no reference to the practice in the United States of America, of which he has great experience.
§ 9.15 p.m.
§ Lord Hacking
I was very relieved that when the noble Lord interrupted it was not because he was unable to hear me. Every other interruption I have had from the noble Lord in recent times has beer for that reason.
It is true that I am a member of the Bar of the State of New York. Indeed, I believe that I am the only member of the Committee who is also a member of the Bar of the State of New York. I have no detailed knowledge of the point raised by the noble Lord, Lord Morris, but certainly the disciplines in the legal profession in the United States of America are nothing like so well regulated as they are in this country. Therefore I was not at all surprised to hear the noble Lord, Lord Morris, speak about the circumstances in which the consumer in the United States of America is not properly protected in respect of convevancing matters.
This adds to the concern in this Bill. There is not in the United States of America an exclusive monopoly reserved to lawyers for conveyancing services. It is open, therefore, to a number of persons at large to indulge in the practice of conveyancing. In this Bill the Government are proposing to do the same; to release conveyancing to a number of persons who will not be subject to the same disciplines as is my own profession here in England.
§ Lord Houghton of Sowerby
I support the noble Lord, Lord Hacking, on this matter. What is more remarkable is that Clause 121 is not exclusive to building societies. It is not really a part of this Bill. It has been tacked on to this Bill We know that there is a history to this matter, which I believe should be the subject of a separate Bill that can be discussed, as the noble Lord said, in more propitious circumstances. Not only does this provision come at the end of a very complex Bill that is full of problems, as well as opportunities, for the building societies themselves, but we are discussing it at a late hour, and at a time when so many late hours have probably made Members of the Committee rather weary of the process of legislation.
I do not consider that it is being fair to the subject or to the Committee to be dealing with this matter in such conditions. Moreover, I suggest that in this connection building societies have quite enough on their plates under the Bill already. We do not know how it is going to work out. We do not know who will want to take advantage of the opportunities that the Bill offers. We do not know how the building societies will conduct their affairs under the new regime that is ahead of them.
I plead for leaving Clause 121 out of the Bill altogether. We should let the building societies get on with their job for the time being. Let us consider this matter as a separate issue; that is, the devaluation of what has been regarded as legal work in the hands of a profession, which is important to all citizens who buy houses however they come by them and fromwhatever source they obtain help.
If we were dealing with a trade union instead of with the legal profession, we should be hearing something from that quarter. One is apt to overlook the consequences for a very large number of independent practices. They are well-established, employ staff, have good connections, and do their work well. Some of them are almost an annex of the building societies because they handle a huge volume of work, probably under conditions that give satisfaction all round. I do not like the clause at all.
The conditions that the noble and learned Lord the Lord Chancellor may lay down need to be very carefully examined. It is obvious that this measure is one that should be under strict control, strictly regulated, and fully safeguarded. Those are all in the paragraphs of the schedule, and each one requiring more attention than we can give tonight.
The Government and the building societies—more the building societies than the Government—want this Bill. In the circumstances I think they have to be satisfied with what it is possible for your Lordships' House to do. I agree that there is no real urgency on this. My other plea is that if we leave the clause in the Bill, we should at least put a timetable to it and let it lie fallow for consideration in two or three years' time. The effective date could be inserted in the Bill accordingly. That would give considerable notice to many people who could get ready for it. The noble and learned Lord the Lord Chancellor would have an 556 ample opportunity to look at the rules, and everyone could become accustomed to the idea.
I say this without any interest in the matter. I also say it as one who, as chairman of a housing association, had the novelty years ago of a composite fee which embraced the survey and the legal charges. That composite arrangement was convenient for borrowers because they knew what their costs were before they started. Of course, the Law Society stepped in and stopped it. However, that is a long time ago. That kind of service might be available in the future, but a few barriers would have to come down before then.
I feel that we cannot be asked to go on with this discussion tonight on the assumption that we are going to pass this clause and that the Bill is to go forward. That is asking too much and I should not be willing to co-operate in doing it.
§ Lord Foot
Since the next items of business when we finish this Motion are the 18 amendments standing in my name I would be very unpopular if I inflicted any speech on the Committee at this stage. However, I should not like it to be thought that I do not have a great deal of sympathy with what has been said by the noble Lords, Lord Morris and Lord Hacking, and particularly by the noble Lord, Lord Houghton, whose support and assistance I very much welcome.
The amendments I shall be moving a little later, assuming that this Motion is not carried, are an alternative approach to the proposition that we should strike out Clause 121 altogether. I hope to put that alternative approach to the Committee, in particular in order to hear what comments the noble and learned Lord the Lord Chancellor might make.
In conclusion, may I say that we are all extremely grateful to the noble and learned Lord that he has come here to deal with this matter. It is particularly his province, since the whole structure of Clause 121 and Schedule 21 turns upon decisions which are to be made by the noble and learned Lord.
§ Lord Coleraine
I have not spoken on these conveyancing matters on this Bill before and so I declare my interest in that I am a practising solicitor. I can go a stage further than did the noble Lord, Lord Hacking, and say that I am basically a general practitioner and a conveyancer as such. I am not a specialist conveyancer, but I am a conveyancer, and so I am very much interested in what happens to this clause and the schedule.
Clause 121 and the schedule as drafted appear to me to be unsatisfactory because they deal with the question of recognition and not with the conduct and misconduct of corporations which are allowed to provide conveyancing services. That this is so is made clear in my mind by the complete absence of provision in the recognition rules of penalties which could in any realistic way be said to be appropriate to the rough and tumble of conduct and misconduct.
Apparently, by these provisions the legal profession is to be subjected to unfair competition in two ways. First, there are the anti-competitive practices, such as the offering of loss-leading packages, loss-leading services and all-in packages. It appears from our debates on Clause 35 that in general the Government 557 approve of these practices. My noble friend Lord Brabazon was only able to offer the Competition Act 1980 as a remedy for abuse if it arose, and I can thank him no more warmly for that offer than did the noble Lord, Lord Foot, at the time.
The second point concerns the fact that solicitors do, and licensed conveyancers will have to, abide by rules of professional conduct, which is a shackle, if you like, that Schedule 21 does not appear to provide for big business. I recognise that there are what I would call the anomalous provisions of paragraph 2(2)(a) of Schedule 21, which relate to conflict of interest. However, one swallow does not make a summer and it seems to me that if business conveyancers are not to be subject to proper rules of conduct the inevitable and logical result will be a demand for the profession to abandon its professional standards when they are not shared by the competition.
I am puzzled by my noble friend's reference to Schedule 21 when he says that it does not contain penalties. It is littered with penalties—for example, for someone pretending to be a recognised practitioner, and for an institution pretending to be a recognised institution there is a penalty at paragraph 10(2) and elsewhere. 1 should be interested to know why my noble friend felt as he did.
§ Lord Coleraine
I am grateful to my noble friend for raising that point. I said that there seemed to be no penalties to deal with the peccadilloes of recognised practitioners. I think 1 am right in saying that the penalties to which my noble friend has drawn attention are those which apply to people who pretend to be recognised and who are not actually recognised.
The Lord Chancellor
At this hour I do not think we should wholly neglect the fact that what we are discussing is whether Clause 121 shall stand part of the Bill, and nothing else. Of course it is clear that from the start the Bill has contained provisions of importance to solicitors and other institutions, which include building societies and other corporate entities such as banks and possibly estate agents. The provisions raise questions of principle but the policy of the Bill has always been to allow such institutions to provide conveyancing services as defined, but subject to conditions. What is at issue here is the balance between "competition"—though I hate to use the word, and in this context I would rather use a phrase such as "facilities available to the public" than "competition", which is so agreeable to others—and the protection of consumers. It seems to me that what we have to defend is the protection of consumers in relation to the policy of the Bill.
Let no one pretend that this clause is not part of the essential policy of the Bill. It is basically a Second Reading point if it is to be viewed in the light of the speeches which we have so far considered. But it is, as a matter of fact and in the context in which it is, simply an enabling clause. It enables the Lord Chancellor, subject to the agreement of Parliament, to pass regulations on the negative procedure, and those powers are set out in Schedule 21. It is therefore purely an enabling clause.
558 Unless one is going to go back on the main policy of the Bill, one could not accept the removal from the Bill of Clause 121 without crippling and wrecking the Bill. It is no good saying that that is not the intention. That would be the effect. It has always been part of the policy of the Bill.
No one would suggest for a moment that we could have recognised institutions, as provided in the Bill, without a power of regulation either by the Lord Chancellor or, as I should personally greatly prefer, some other Minister. But the lot happens to have fallen on Jacob, and that is why I am here. Therefore this is a wrecking amendment so far as that part of the Bill is concerned, and it has no other purpose. I am sure that my noble friends, when they consider that, would not consider it in any other light.
It is correct that I should view this in relation to the policy of the Government as a whole. I think that it was my noble friend Lord Morris who said that it was the Law Society that had removed scale fees from conveyancing practices. I wish that I had time to tell him what the real truth is. In a word, it was me. I thought that it was a good thing to do, and I did it. The Law Society agreed it and in the end was induced to propose it. Since that time and since this Government took office conveyancing charges have been reduced by 30 per cent.
But two other features are essential to government policy in the matter. One is the establishment of the new profession (if that is the right word) of licensed conveyancers, which was passed last year so far as I remember. It was clearly controversial. I remember at that time the noble and learned Lord, Lord Denning, criticising it from the Cross-Benches. The other is the provision in this Bill to allow "recognised institu-tions", which is the phrase used, to offer conveyancing services.
The question which we have to consider on Clause 121 is simply whether that can be done or has been done with sufficient regard to consumer protection. I wish that both sides in the argument would realise that that is the only point. This is not a question as to whether great institutions such as building societies and banks are respectable institutions to deliver those services. It is not a question as to whether solicitors in this country also provide services in that connection which are suitable services.
I note with pleasure and agreement what my noble friend Lord Morris has said in relation to the comparison that can be rightly drawn between the United States and this country. There is an inherent difficulty about the relationship between lender and borrower. I should feel less confidence in presenting this argument had the matter not already been discussed less than a week ago, when the party opposite and certain others voted against the monopoly of solicitors altogether.
This is an unfair contrast. The question that we have to consider is whether the inherent possible conflict of interest between lender and borrower can be reconciled by means of regulations and by means of compromise. The policy of the Government has been based on the belief that it can. The building societies, broadly and largely, want to do it by means of a series of guidelines or codes of conduct which I discussed last 559 time. The solicitors say that it cannot be done. What is clear is that if it is to be done, it has to be done by an enabling clause—that is, Clause 121—giving the Lord Chancellor of the day power to make regulations subject to control by Parliament as to whether it should be done or not and in what conditions.
Such a Lord Chancellor—I do not suppose for a moment that it would be me, but if it were, I think I can speak for him—would wish to have a certain flexibility and would welcome the fact that when he had exercised his discretion he would be subject to parliamentary criticism and control. No one wants less than a Lord Chancellor, actual or putative, to operate in vacuo with absolute powers. These powers must be flexible, and they must be capable of meeting all eventualities. The Government do not at present intend to allow lending institutions to offer conveyancing services to their borrowers. But if our worries over conflict of interest can be allayed, it will be possible for the then Lord Chancellor to bring forward the necessary amendment to the rules. The aim of those rules will be to ensure that the consumer is properly protected, but not to such an extent that unnecessary restrictions are imposed on those wishing to enter the conveyancing market.
As has been said many times before, the Government's commitment is to increase the field of competition—the phrase is one that I am compelled to use—while maintaining proper consumer protection. I would respectfully say to my noble friend and to those who have supported him that we have struck the right balance on the assumption that the Second Reading points have been adequately made. I would therefore ask him to let this clause go through. We have in front of us a large number of thoughtful amendments put down by the noble Lord, Lord Foot, largely, I believe, inspired by the Law Society. I hope that we can now get on to them.
This is essential Government policy. This clause which is only an enabling clause, giving the Lord Chancellor power to regulate subject to parliamentary control, is an essential cog in that policy. I do not see myself, given the Second Reading points, and given the fact that parliamentary control is available both on the amendments of the noble Lord, Lord Foot, if they come to be discussed, and when any regulations are put down, that this is an unreasonable clause to stand part of the Bill. For that reason I would ask my noble friend not to press the matter to a Division.
Not for the first time I am very grateful to my noble and learned friend for the help he has given the Committee with regard to this matter. I do not intend pressing this matter to a Division, but I need further help. He will no doubt recall with affection the Administration of Justice Act 1985, whereby under Section 32 there is provision for the council to make rules with regard to the provision of conveyancing services by recognised bodies. I accept the fact that these recognised bodies are bodies corporate.
We now have a Bill that is using a completely different procedure and putting more work on to the Lord Chancellor's department. I have no doubt about his capacity for hard work. But this is a completely 560 different Bill with a completely different system for setting up building societies and other institutions, which include bodies corporate. Then one has the council for licensed conveyancers under the Administration of Justice Act overseen again by the Lord Chancellor's department.
I am certainly in a muddle. I rather suspect that the public will be in a muddle as well. If the noble and learned Lord can clarify that I shall be very much obliged.
§ Lord Hacking
It is with some reluctance that I have reached a decision that I do not wish to press to a Division the Motion that has been tabled in the names of the noble Lord, Lord Morris, and myself. I, too, am very grateful to the noble and learned Lord for giving time to the Committee and for being prepared now to consider in detail the amendments that have been tabled by the noble Lord, Lord Foot.
I should like to approach this matter in this way. I should like to see how the noble and learned Lord and the Government respond to the various "thoughtful" amendments—as described by the noble and learned Lord—of the noble Lord, Lord Foot, and to see whether true justice is done to those amendments in the detail of their consideration and in the response that the Government give them.
If, as I fear at this time of night, there is not time to consider them in detail, and that by the time we get to the end of Committee—whether on this evening or another occasion—those amendments have not been given the consideration that I believe Members of the Committee should give them, then the proper moment for again considering whether Clause 121 shall stand part of the Bill would be at Report stage.
I therefore withdraw from suggesting that noble Lords should divide at this moment in this Committee on Clause 121. However, I very much reserve my position and may very much seek to be heard again by Members of the Committee on Report if, as I fear, the Government are unable—not because of any lack of willingness by the noble and learned Lord but because of lack of time—to consider properly the effects of bringing both Clause 121 and Schedule 21 onto the statute book. On that basis, unless any other Lord is bolder than myself and wishes to divide the House, it is not my wish to do so.
The Lord Chancellor
Perhaps I may respond to what my noble friend Lord Morris has said, without seeking in any way to anticipate what we shall be saying on the amendments of the noble Lord, Lord Foot. I think my noble friend made a false comparison when he compared the new profession—which was stage two of the Government's policy, the licensed conveyancers—with this kind of provision. The licensed conveyancers are necessarily small bodies of individual people, rather comparable, and perhaps in competition, with the solicitors' practices. It is an essential part of the architecture of the licensed conveyancers' apparatus, as recommended by the Farrand Committee, that, as the council of the Law Society is in charge of solicitors, the council in charge of licensed conveyancers should lay down the guide rules for their performance and qualifications.
561 Here we are dealing with bodies of a very different order; and differences of scale are very often differences of kind. We are dealing with banks and perhaps other types of institution which I shall not particularise at this time of night. That is a different kind of animal. I say positively and with some conviction that the Government cannot avoid making regulations in relation to institutions of the size of the Halifax, Barclays Bank or whatever. I should like to avoid it because my whole political philosophy is against the involvement of government where possible.
I do not see how we can do what I have tried to describe in the way of drawing a balance between competition and consumer protection other than by putting the burden on some Minister, and whether that Minister should be the Lord Chancellor is another matter. He is the Minister nominated in Clause 121. Whatever else has emerged during the debate, it is not that some other Minister is more appropriate than he.
§ Lord Houghton of Sowerby
I do not know where we are now. I was supporting the noble Lord, Lord Hacking. He is now wilting. To be honest, I am a little confused as to what the noble and learned Lord the Lord Chancellor is putting to us. I know that Clause 121 is only an enabling clause. But one does not pass enabling clauses without some hope or prospect of doing something with them. Surely we do not pass an enabling clause just to put it in a pidgeon hole to be brought out in the distant future. It is a current item of policy.
Although we are discussing the enabling clause, the moment we accept it we will be asked to go on to Schedule 21. Presumably the noble Lord, Lord Foot, will then say. "What about my amendments?" If we do not take his amendments tonight, the schedule will go through unamended. We shall not know where we are until the Lord Chancellor—I refer to the office, not so much to the noble and learned Lord—produces his scheme. It can then become a matter of parliamentary business.
This is a subtle way along the Rake's Progress. If we are not ready to go on, we should not go on. I know that the Government have had a choppy time with this proposal. I sympathise with them. I do not think they can get off their hook by slinging this proposal into a Bill which deals exclusively with building societies except with regard to this one clause.
We have gone through all the problems of the building societies. The earlier debate was only a curtain raiser. We now return to this clause, which is not exclusively a building societies matter. The banks are in the mortgage business. Other finance houses can go into the mortgage business. The same considerations will arise if they are accredited, approved institutions.
If we are going on, we must, in view of the importance of the business, spend time on it. The House sat until 2.13 this morning. I did not leave until 11.30 p.m. We have been late each night. Each night we are warned that we will be late or very late. Protest has been made on the Floor of the House by the Leader of the Opposition, but here we are, on the rack all the time.
562 If we are to deal amply and properly with this matter, it should be deferred until the day of the Report stage, which is tomorrow week. Let us deal with the final stages in Committee and go on to the Report stage under the provisions which allow for two stages of a Bill to be dealt with on the same day. Let us do anything other than go on tonight with a Committee which is obviously not ready. I cannot see that it can be ready, with the present amendments, to deal with this important matter.
I hope that someone on behalf of the Government will state clearly whether we are to be pushed on tonight or whether we can deal with the matter more satisfactorily by alternative means.
§ Clause 121 agreed to.
§ Schedule 21 [Provision of conveyancing service by recognised institutions and practitioners]:
§ Lord Foot moved Amendment No. 247:
Page 267, line 14, leave out ("may") and insert ("shall").
§ The noble Lord said: I have of course been carefully considering, during the last 10 minutes or so, in the light of the observations that have been made by the noble and learned Lord and by the noble Lord, Lord Houghton, as to what course I should now take. I am under some obligation to indicate to the Committee how I propose to deal with the matter. I do not think it would be satisfactory to try to push this off to the Report stage. It is a very late hour, but the noble and learned Lord has come down here specially to deal with this matter, and it would be only polite to him to allow at any rate a short debate on these amendments.
§ My intention is to move the first amendment and, in the course of my remarks, to speak to all the subsequent 17 amendments in my name. I thought it right to explain that, because I do not want any Member of the Committee to be misled as to what is going to happen. I think it very likely that when I have dealt with the matter in that way, after hearing the response of the noble and learned Lord I shall see fit not to move any of the remaining amendments.
§ My primary object tonight in putting forward these amendments is to try to see what reassurances we may be able to obtain from the noble and learned Lord, and what further indication we may be able to get as to what structure of recognised institutions he foresees as emerging from Schedule 21 when it is eventually ordained to be put into effect.
§ I had intended tonight to go through these 18 amendments as briefly as I could and to indicate, where necessary, their significance. As a matter of fact quite a number of these amendments are almost self-explanatory. I had intended in the case of some of them only to read the amendments to the Committee, and in the case of others to add just a few words. But even that would take quite a long time, and I should like to reserve the right, even after we have had this debate, if needs be to return to this matter when we get to the Report stage in order that we could consider it at, I would hope, a more convenient hour and at an hour when we can give it better and proper consideration.
§ May I make a few general observations upon these amendments and upon Clause 121 and Schedule 21? 563 On any showing—and of course there are deep divisions about this matter in the Committee—everybody would agree that this clause and schedule together are matters of great importance on various counts. One of them is that the clause and the schedule foreshadow a revolutionary change in the historic way in which we have gone about the conveyance of land. As has been pointed out by the noble Lord, Lord Morris, this follows upon the Administration of Justice Act when we set up the system of licensed conveyancers.
§ This is a further enlargement of the right of different institutions to take part in conveyancing practice. At the same time (I have to say this) it seems to me that this clause and schedule are the least informative part of the whole Bill. What sort of structure will eventually emerge when the noble and learned Lord the Lord Chancellor (or possibly some successor) implements the provisions of the clause and the schedule? What sort of structure of recognised institutions will emerge, how will they work, under what sort of conditions will they work and subject to what rules will they be recognised? All these matters are in complete doubt as they stand today.
§ The last thing I should like to say in general terms is that this is inevitable and probably it would be agreed on all sides of the House. This whole matter is of most urgent concern to the legal profession generally and to the Law Society in particular, on whose behalf I have the honour to speak tonight. The objectives which perhaps I may best be able to achieve tonight are twofold: one is to identify and to reflect those matters which are of such deep concern to the members of my profession. The other is, as I think I said just now, to see what reassurances we may be able to get from the Lord Chancellor and what further and better particulars we may be able to get from him as to what he sees this new structure will be like.
§ I now revert from what I was intending to do and address myself to the proposition that the noble and learned Lord advanced just now, that the main test of what we are doing here in the clause and the schedule must be whether it is for the protection of the consumer. I fully accept that that is the overriding purpose. I shall not go through all my amendments in detail or recite them to the Committee, as you have them in front of you, but if the Committee will look at Amendments Nos. 250 to 260 Members will see that I have produced a whole series of amendments. I think I can probably say that none of them is designed for the protection of my profession, but every single one is designed for the protection of the consumer. If that is the test that the noble and learned Lord applies then I am happy that my amendment will receive sympathetic consideration.
The amendments fall into three groups. The first three, Amendments Nos. 247 to 249, are concerned with a procedural matter. The schedule at the beginning of the first paragraph provides that,
The Lord Chancellor may, in accordance with the provisions of this Schedule, make rules with respect to the recognition by him of institutions as being suitable to undertake the provision of conveyancing services.
§ The Law Society is a little bewildered that that should be permissible rather than obligatory.564
The first of my amendments seeks to make it "shall" instead of "may", obligatory instead of permissive; because, surely, if we are going to have institutions recognised as being suitable to carry out conveyancing services it is essential that those rules should be laid down before any body is admitted as a recognised institution so that everybody will know what are the rules by which one can gain such recognition. No harm would be done that I can see and things will be made very much clearer if the word "shall" were substituted for the word "may". The argument is the same when you look at the beginning of paragraph 2, where it says:
Recognition rules may prescribe",
§ this, that and the other. Why should it not be "shall" prescribe?
Then, finally, at Paragraph 2(2) we find again:
Without prejudice to the generality of sub-paragraph (1)(b) above, rules made by virtue of that provision may prescribe such condition as appear to the Lord Chancellor to be appropriate for the purpose of … protecting persons
§ and so on. I will come to that in a minute.
§ I hope that that is acceptable, but it does not go to the root of my amendments. If I turn now to the subsequent amendments, which are the body of the matter, I am not even going to read them all through because I think it will be tedious to do it at this time of night and I do not think that any useful purpose would be served. But perhaps I may draw the Committee's attention to one of these amendments, which I hope goes a long way to meeting the problem of conflict of interests.
In the schedule as it is now drawn the problem of conflict of interests is dealt with in this rather indirect way. It is dealt with under paragraph 2(2), and perhaps I may read that.
Without prejudice to the generality of sub-paragraph (1)(b) above, rules made by virtue of that provision may prescribe such conditions as appear to the Lord Chancellor to be appropriate for the purpose of (a) protecting persons for whom conveyancing services are provided by recognised institutions from conflicts of interests that might otherwise arise in connection with the provisions of such services.".
There we are told that it is contemplated that a condition will be prescribed which will deal with the matter of conflict of interest; but it does not tell us how it will deal with it. My amendment is designed to put that into clear language. What has been proposed is that there should be an addition at the appropriate point in the schedule saying this:
Recognition rules shall prohibit a recognised institution from providing or offering to provide conveyancing services for any person to whom that institution or any associated body has made or offered to make or contemplates making a loan secured on the property in respect of which the conveyancing services are provided".
That cannot be less than acceptable to the Government because it reproduces almost exactly the announcement which the Government made in December of last year, after the consultation process had taken place, and I have no need to remind the noble and learned Lord what that said. This is the passage:
Following that consultation, the Government have concluded that there is no difficulty in principle in such institutions providing conveyancing to persons to whom they are not also offering a loan. However, the Government are not satisfied that lending institutions could safely be permitted to offer both conveyancing and loan in the
same transaction. It is therefore proposed to prohibit lending institutions from providing conveyancing, either directly or through a subsidiary company in which they hold a majority stake, to those who are also borrowing from them".
§ Nothing could be clearer than that. The Government are wholly committed to that principle. I am merely asking in my amendment why it should not be written into the schedule.
§ I do not think that I need refer to any other of my amendments, but if noble Lords will be good enough, when they have the time, to look through them, I do not think they will have any difficulty in understanding what is intended. I also hope that they will come to the conclusion that everyone of them has been designed and put forward for the primary purpose of protecting the public against abuse.
§ The last three amendments to which I should like to make a short reference are Nos. 261, 262 and 263. I think all I need to say about them is this. Under the terms of the schedule, it is provided that where the Lord Chancellor is satisfied that the conditions under which a recognised institution has been operating have been in any way abused, he can withdraw their recognition.
§ The object of my amendments is to allow the Lord Chancellor in a suitable case, where he thinks that to withdraw the recognition altogether would be too draconian a penalty, the discretion of imposing further conditions on the institution which is at fault, which of course would be a lesser penalty than the withdrawal of recognition, bearing in mind that the withdrawal of recognition might mean a complete wrecking of the undertaking in which the individual or the institution is engaged.
§ I hope that that will do. I am afraid I have given a very inadequate presentation of the matter. But I should like to finish, if I may, by asserting what I said at the beginning: that while my profession of solicitor is of course deeply involved in this business, we are at considerable risk if we find ourselves in competition with the banks, the insurance companies and the building societies and indeed other institutions in the business of conveying property. We stand at very considerable risk, but I think we are prepared to accept that situation so long as we are given a fair run, and so long as the terms of competition with the big institutions are as fair as they can be made.
§ I have never had any worries about the setting up of the system of licensed conveyancers. When we were debating that in the Administration of Justice Act, I said at that time that I did not myself believe that that scheme would ever really mature, because I did not think that people would have sufficient confidence in the limited licensed conveyancer, as compared with the fully qualified solicitor. I conclude as I began, by saying that all these amendments are designed primarily for the protection of the consumer. I beg to move.
§ Lord Broxbourne
As this is the first occasion on which I have made any oral contribution to these proceedings, I should start by making a declaration. It will, however, be a negative declaration—a declaration of non-interest. In making such a declaration, I appreciate that I am, in the context of these proceedings, a rara avis—possibly even a rarissima 566 avis, if that is not too extravagant and improbable a concept to apply to myself.
The Second Reading proceedings on this Bill contained a prolonged sequence of declarations of interest by noble Lords addressing the House on that occasion. I have no interest in the financial or technical sense. I am not a director of a building society. I am not a depositor, I am not a mortgagor. In a general sense, I wish the building societies well, both because of my long interest—indeed, my hereditary interest—in housing, and because I am an honorary associate of the Royal Institution of Chartered Surveyors.
Again, on the other hand, I have no interest in a technical sense to declare in respect of solicitors, though again I wish them well. I have had an agreeable relationship with them over the years in my professional practice. Indeed, I do not have far to look in this Chamber for pleasant reminders of that relationship, but not in the context of conveyancing. I am not sure which would be the more improbable —that solicitors should have wished to instruct me in conveyancing, or that I would have wished to accept their instructions in that regard. It is a question on both counts of scaling the heights of improbability, or perhaps in the context I should say, of plumbing the depths.
But it means that I am in the enviable situation— unlike so many noble Lords who have addressed the Committee on the matters concerning this Bill—of a position of objectivity. I am able to test the provisions of the Bill regarding conveyancing by reference to the basic relevant criteria. I identify those relevant criteria as being five in number: first, consumer protection; secondly, avoidance of the conflict of interests; thirdly, professional independence and competent supervision; fourthly, separate accounting with appropriate checking thereof and information in regard thereto; and, lastly, disclosure of commissions and requirement of the client's consent thereto.
Those matters are fundamental and they are sought to be achieved in the fasciculus of amendments to Schedule 21, which were moved with characteristic persuasive eloquence by the noble Lord, Lord Foot. They are proper safeguards, to which he seeks to give effect in this series of amendments. They are clear and cogent provisions and they are not oppressive provisions. The amendments of the noble Lord would not impose on building societies or other recognised institutions safeguards or restrictions not accepted by solicitors in their own professional practices regarding conveyances. So I think it is fair to apply the old principle of what is sauce for the goose should be sauce for the gander.
So I conclude by saying this. As a well-wisher, I would ask the building societies to view the noble Lord's amendments in this light and, having so done, to inform Ministers that they accept and indeed welcome the spirit and substance of these amendments. For myself, I think that the drafting is unexceptionable, as perhaps we would expect from the Law Society. But if improvements of drafting are required, there is time for parliamentary counsel to bring their efforts to bear between now and the Report stage. Subject to that, I welcome the pith and purpose 567 of these amendments and hope that, on reflection, they will commend themselves to building societies and Ministers alike.
§ Lord Hacking
As the noble Lord, Lord Foot, did not wish by his silence, when I was moving that Clause 121 should not stand part of the Bill, to indicate that he was not supportive of the argument that was presented to the Committee, nor do I wish by my silence not to record my support of the amendments that have been moved by the noble Lord, Lord Foot. Although the noble and learned Lord took a different view when he made his comments on Clause 121, I was not seeking to wreck this Bill. I was seeking to be constructive. I am sorry that I wilted and did not press the matter to a Division, but I did not think it was the appropriate time to do so. I certainly will not wilt at Report, if I have the same fears and worries about Clause 121 and Schedule 21 at that stage of the progress of this Bill.
I believe that the amendments that have been tabled by the noble Lord, Lord Foot, are fully worthy of consideration. I hope to hear from the noble and learned Lord the Lord Chancellor that, if he is not able to accept the amendments as moved by the noble Lord, he will give them proper consideration.
There is a need to make a number of these provisions mandatory in the rules, for the reasons explained by the noble Lord, Lord Foot, and there is a need for these other clauses to go within Schedule 21. There is a particular need, which I do not believe can be over-emphasised, to deal with the serious problem of conflict of interest and a need therefore—and I would ask noble Lords to think of other amendments and to be supportive of them—at least to pass into that schedule the amendment which stands as Amendment No. 255 in the name of the noble Lord, Lord Foot, which he addressed in more detail to the Committee. I now wait to hear, as do other noble Lords, what the noble and learned Lord's responses are. I have heard his asides. I have been in the unusual position of hearing them, because I do not usually hear his asides. I now look forward with anticipation to hearing him at the Dispatch Box.
§ 10.15 p.m.
§ Lord Coleraine
It will come as no surprise to the Committee to learn that I also wish to support the group of amendments inspired by the Law Society and moved by the noble Lord, Lord Foot. The amendments are designed to deal with the protection of consumers, and if they also have the effect of protecting the profession then, in this case, what protects the profession protects the consumers and vice versa. As the noble Lord has made clear, these amendments, especially those from Nos. 250 to 260, are intended to ensure that conveyancing corporations are subject to just those disciplines and standards which long and sometimes bitter experience has taught the Law Society are absolutely essential for the protection of solicitors' clients embarking on what are the most financially important transactions of their lives. I do not propose at this late hour to go into any detail on the terms of the amendments, but I should like to instance something which has come to my attention very recently which throws some light on the sort of problems which arise in conveyancing.
568 Very recently I have been speaking with a solicitor in Nottingham. He feels that he and his clients have reason to fear unfair and unprofessional practices from the big corporations. A longstanding client of the firm, a Mr. H., went to obtain a mortgage from the Nationwide Building Society, not one of the small ones. The society offered the advance and recommended to Mr. H. that it should be in the form of a pension-linked mortgage with the Norwich Union Insurance Company. Mr. H. was worried about this advice and he turned to his solicitors for financial advice. Here I pause for a moment to recall the discussions on Amendment No. 7, when it was suggested that if a conflict of interest arose it could be solved by a simple code of practice and the suggestion was made that one should go to a solicitor for financial advice.
This gentleman went to his solicitors and saw a managing clerk. Mr. H. took the initiative in telling the managing clerk that he was a bit worried about the way in which the policy had been "sold" (I use the word "sold" in quotation marks) by the building society, and he asked the clerk for a second opinion. The clerk acted in accordance with the practice of the firm and an introduction was arranged with an independent firm of insurance brokers which the firm considered to be experienced and able to be relied upon. The result was that the client chose a policy with another company altogether. I should mention that I was told that it is in fact the particular policy of the firm of solicitors in question not to have arrangements to share commission with insurance brokers; but nothing turns on that point.
The senior partner of the firm of solicitors received a letter dated 17th June—last month—from the branch manager of the building society. I have seen a copy of that letter. In fact, I have a copy. The firm was so incensed that it sent a copy to the Law Society. Every bit of that letter is informative, and if the Committee will bear with me I will read it, or most of it, substituting only Mr. H. for the name of the client and "your firm" for the name of the solicitors' firm.
The letter says:For many years this Society has enjoyed very good relationships with your Company … and although it is an unpleasant task to write this letter, I cannot let the matter pass without comment.I recently instructed your … office to act for the Society in the preparation of a mortgage for the above named";that is Mr. H.The borrower, a long established client, was counselled by a member of my staff and eventually it was agreed that a Pension-Linked mortgage in conjunction with the Norwich Union would best suit.Your Mr. MacKerracher has today admitted to me on the telephone that he, 'recommended the client see a broker contact of his … to get a second opinion'.The result of this unethical approach which I would not expect from any firm of solicitors, is that Mr. H. is still proceeding with a Pension-Linked mortgage but with the Sun Alliance as sold to him by the broker, and Nationwide has lost commission earnings of £834.27.I ask, therefore, that the partners of [your firm] reimburse the society for this loss".I do not for a moment suggest that this letter is in any way representative of the building societies. In fact, I am certain that it is not. Nor do I suggest that is how building societies would behave in future if they were given the powers that we are discussing tonight.
569 Nevertheless, the fact remains that the letter was sent, and it exemplifies many of the problems that conveyancing by big business will bring with it. Of those, I would mention conflict of interest, the power of the strong to lean on the weak, and the pressure of commissions—whether they are retained or accounted for to clients. All I would say tonight is that I hope my noble and learned friend will consider carefully the views that have been expressed. The recognition rules that are to be made under Schedule 21 will not be adequate to deal with the problems that will arise. I hope that we shall hear from my noble and learned friend that those are matters with which he is concerned.
The Lord Chancellor
I am very grateful to the noble Lord, Lord Foot, for the way in which he has moved this long series of detailed amendments. I may say at once that I am perfectly sure that the course he has taken, which is in a sense paradoxical, is absolutely the right course; that is, to speak to all the amendments together. That obviously places me in a difficult position, but it is a position in which the noble Lord was perfectly justified in putting me; I make no complaint about that.
The amendments fall, as the noble Lord rightly said, into three groups, and I shall deal with them so far as is possible within those three groups. If I may say so, I absolutely accept not only the bona fides but also the correctness of the way in which the noble Lord put the issue that I, and any successor of mine, will have to face in making the regulations. The question is how one reconciles the necessary degree of consumer protection, which last week's debate showed many members of the public are not sufficiently aware of at the present time, with the fullest possible availability of services to the public.
I believe that I am right in saying that as a result of their own efforts, and encouraged by the Government, solicitors' conveyancing fees have gone down by 30 per cent. in the past seven years. I have seen figures, although at the moment I am not in a position to quote them, that show how much lower is the cost of conveyancing in this country—by which I mean England and Wales—than it is in very many other countries outside our jurisdiction. The charge that is made against the Law Society that it is keeping up fees by the protection of a monopoly is wholly unjustified, and I should like to go on record as saying so.
That point brings me to the way in which we deal with Schedule 21. The first group of amendments would compel me, or any successor of mine, to make amendments that the schedule already provides that 1 or he (or she, for that matter) would have power to make in any event. I fully concede, and I start by conceding, that they are all amendments which, if we went down the path that is indicated that we might go down in Clause 121, would raise very important questions for us to consider.
Of course, we are not compelled or committed to go down that path, except to the extent that consumer protection demands that we do so and except to the extent that the availability of services demands that we ought to do so in order to make available as wide a provision for the public as possible. That means, I submit, that it must be wrong to compel any future 570 Lord Chancellor to make regulations which relate only to a step on the road which he may not wish to take at all after consulting his colleagues. The right course is surely to give him a wide and flexible power to protect the public against misuse and to encourage the public to make use of facilities which are and ought to be available given proper supervision and an adequate level of service.
For example, the sort of matters which the recognition rules may need to cover will of course be the subject of long and detailed consultations over the next few months. They clearly must make provision for the proper supervision of conveyancing work. They clearly must ensure an adequate level of service. There will be a number of purely mechanical matters such as the form of application for recognition and the fee, if any, which will have to be paid. Any Lord Chancellor will be concerned to ensure the proper protection of the client's money. Obviously he will also have to be very careful as to how that is done.
Building societies and other institutions are already in the business of looking after other people's money. I would in particular say, referring to one—and I am not able to point to it at this moment—that I do not see any need for a provision requiring accountants to furnish the Lord Chancellor with a report. Those institutions concerned will have shareholders and annual meetings and other obligations which will make such a condition superfluous. The general principle is to encourage the availability of services while ensuring the protection of consumers. I should have thought that the powers in the Bill were sufficient for this purpose.
The third group of amendments gives the Lord Chancellor power to impose further conditions on recognised institutions. I do not think that is necessary. The powers contained in Schedule 21 I believe enable any Lord Chancellor to take account of the kind of approach envisaged in the amendments. It is worth pointing out that the Law Society—for which I have the greatest respect and with which I either have, or hope to resume, the closest and friendliest relations, because I have spent my life working with solicitors and largely derive my livelihood from their confidence —is hardly entitled to expect matters to be enshrined in primary legislation beyond the point at which they are enshrined as regards solicitors in the Solicitors Act 1974.
We must remember—I made this point earlier but I shall make it again in this context—that there are three separate stages in this argument. The first is the removal of unnecessary restrictions on competition. The second is the creation, which was done under the previous legislation, of the new profession of licensed conveyancers. The third is the enabling provisions of this Act, which enable building societies in the first place, but also—potentially at any rate—banks and possibly other institutions to provide conveyancing services of one sort or another; and I should have thought that they vary a good deal and the differences between them are probably relevant to the kind of point that we are discussing this evening.
We do not want to impose on the licensed conveyancers every kind of restriction or provision that is imposed on solicitors—as was done by the council under the previous legislation—and we cannot 571 treat the building societies and the banks as quite the same sort of animal as a firm of solicitors that has four or five partners and a number of clerks. Constraints that we impose on the one are not necessarily appropriate to the other. This also applies to some of the powers to which the noble Lord, Lord Foot, referred in his speech. He spoke as if I or some successor of mine required something more than a lack of recognition or a withdrawal of recognition as a sanction. I rather doubt it. It might well be so in relation to a small firm, but I doubt whether it is so in relation to a big organisation such as the Halifax.
A word in time and a warning given at the appropri-ate moment would probably be more effective. Of course, the ultimate sanction is the withdrawal of recognition, but I do not see why I or any successor of mine would need any intermediate power there, though an intermediate power might be very appropriate indeed in relation to some smaller entity. In any event, my advice at the moment is that the kind of intermediate power which the noble Lord, Lord Foot, has in mind is probably available to the Lord Chancellor under Schedule 21, anyway.
I am willing to take further advice about this matter. I am very undogmatic about it, if I may say so. But I would say two or three things in conclusion. The first is that all the matters which are referred to in the first set of amendments as being imposed on the Lord Chancellor are matters which any Lord Chancellor would take into account if he goes along that road, and so far along that road as he chooses to go—as to which I can give no undertaking because I cannot bind my successors. I shall go extremely cautiously, if I am allowed to do so.
The seond point is that so far as regards additional powers, I do not think that they are necessary under Schedule 21. The third point is that I must be and any successor of mine ought to be allowed to apply to the larger institutions which are envisaged in this Bill the sanctions, constraints and rules which are appropriate to that sort of animal, and not necessarily those which are appropriate to the rather small solicitors' organisation which has hitherto been providing these services.
I hope that I have not given an unsympathetic account of these amendments. I shall certainly reflect upon what the noble Lord, Lord Foot, has said, and ask for further advice, because what he says always carries a very great deal of weight with me, even if it does not come with the imprimatur of the society to which he belongs. But as at present advised, I do not believe that the amendments are necessary. I believe that any Lord Chancellor would give effect to their spirit.
§ Lord Foot
I thank every noble Lord who has taken part in this little debate. There are only two things that I need say before I withdraw the amendment. First, I very much appreciated the comments made by the noble Lord, Lord Broxbourne. I think that it is the kindest thing he has said to me in 60 years, from the days when we used to engage together in the Oxford Union. The noble Lord rightly said that the limitations that we seek to impose are not in any way impressive and that many of them are an exact reproduction of 572 the limitations and restrictions under which solicitors have worked for generations.
That brings me to the point of the noble and learned Lord the Lord Chancellor. He said at the end that it was not appropriate to try to impose upon the institutions restrictions and limitations which may be recognised under the schedule of the kind that are imposed by rules of practice and legislation upon solicitors. I should have thought that, because those institutions will have a double or treble interest—quite apart from the interests of the consumer that they are serving—there was a good argument for imposing more rigid restrictions on such organisations. In the case of solicitors, there is the whole apparatus of the disciplinary committee to oversee the operation of all solicitors on a regular basis. When we have organisations which in the nature of things will be from time to time confronted with a conflict of interests there is an even stronger argument for imposing regulations on them. But my amendments do not do that. They certainly go no further than the limitations and restrictions under which we have lived for so long.
It would have been unreasonable for me to have expected that the noble and learned Lord could have gone very much further than he did. I am grateful to him for having given this consideration to the amendments. I hope that it might be possible for there to be some discussion between the Law Society and his department in the interval between now and the Report stage with a view to seeing whether there is anything in the amendments which he thinks, on reflection, would be appropriate to be included in the schedule. If that could happen, we should have made substantial progress. In any case, I am grateful to the noble and learned Lord for the way that he has received the amendments. Having said that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments No. 248 to 264 not moved. ]
§ Schedule 21 agreed to.
§ Clause 122 agreed to.
§ Clause 123 [Commencement]:
§ Lord Skelmersdale moved Amendments Nos. 265 and 266:
Page 170, line 27, leave out ("section 121") and insert ("sections (Power to make transitional and saving provisions), 121, 122, this section").
Page 170, line 30, at end insert ("or different purposes".).
§ The noble Lord said: I spoke to both these with Amendment No. 230. I beg to move.
§ Lord Williams of Elvel
May I thank the noble Lord, Lord Brabazon, for the way in which he has handled the Committee on behalf of the Government, and also the noble Lord, Lord Skelmersdale, for the courtesy that he has extended to us? I wish also to thank the noble and learned Lord the Lord Chancellor for spending so much time on what was a most interesting debate. I hope that the noble and learned Lord did not think that we on the Opposition Front Bench had taken trappist vows. We did not wish to intervene on a subject that was the concern of expertise other than our own.
§ Lord Brabazon of Tara
I am grateful to the noble Lord, Lord Williams of Elvel, particularly for his toleration of the huge number of Government amendments. I am glad that we were able to produce notes on the amendments for his use. I undertake that there will be far, far fewer amendments from the Government at Report stage. Nevertheless, we shall still produce notes on them for noble Lords.
§ Clause 123, as amended, agreed to.
§ House resumed: Bill reported with amendments.